Legal Aspects of Business | Competition Law | Competition Act, 2002 | MCQs
Here is a set of multiple-choice questions (MCQs) based on Competition Law. Each question is followed by its correct answer.
1. Purpose of the Competition Act, 2002
Q1. The primary purpose of the Competition Act, 2002, is to:
a) Prevent unfair trade practices
b) Foster competition and economic development
c) Regulate prices of goods and services
d) Provide financial assistance to businesses
Answer: b) Foster competition and economic development
2. Establishment of Competition Commission of India
Q2. The Competition Commission of India (CCI) is established to:
a) Regulate financial markets in India
b) Promote fair competition and prevent anti-competitive practices
c) Conduct research in economic development
d) Monitor Government policies on businesses
Answer: b) Promote fair competition and prevent anti-competitive practices
3. Objectives of the Competition Act
Q3. The main objective of the Competition Act, 2002, is to:
a) Control Government interference in the market
b) Prevent anti-competitive business practices and regulate mergers
c) Promote the welfare of businesses only
d) Increase consumer protection
Answer: b) Prevent anti-competitive business practices and regulate mergers
4. Types of Anti-Competitive Practices
Q4. Which of the following is an example of anti-competitive practices as per the Competition Act, 2002?
a) Creating barriers to entry
b) Offering discounts for bulk purchases
c) Promoting brand competition
d) Entering into non-restrictive agreements
Answer: a) Creating barriers to entry
5. Anti-Competitive Agreements under Section 3(1)
Q5. As per Section 3(1) of the Competition Act, 2002, any agreement likely to cause appreciable adverse effect on competition is:
a) Valid and enforceable
b) Conditional upon government approval
c) Void
d) Permissible with a penalty
Answer: c) Void
6. Prohibited Anti-Competitive Agreements
Q6. Which of the following is NOT considered an anti-competitive agreement under the Competition Act, 2002?
a) Agreement to limit production/supply
b) Price fixing
c) Exclusive distribution agreements
d) General partnership agreements
Answer: d) General partnership agreements
7. Bid Rigging and Collusive Bidding
Q7. The practice of bid rigging is considered:
a) A lawful business practice under the Competition Act
b) A competitive business strategy
c) An anti-competitive agreement
d) A marketing strategy for government contracts
Answer: c) An anti-competitive agreement
8. Presumptive Anti-Competitive Effects
Q8. Under the Competition Act, 2002, agreements to limit production or allocate markets are presumed to:
a) Be beneficial to competition
b) Have no effect on competition
c) Cause an appreciable adverse effect on competition
d) Be regulated by the government
Answer: c) Cause an appreciable adverse effect on competition
9. Rule of Reason
Q9. The "Rule of Reason" applies to which type of anti-competitive agreements?
a) Agreement to limit production/supply
b) Price fixing
c) Resale price maintenance
d) Bid rigging
Answer: c) Resale price maintenance
10. Abuse of Dominant Position
Q10. An enterprise is considered to be in a dominant position if it:
a) Operates independently of competitive forces in the market
b) Has a smaller market share compared to competitors
c) Competes aggressively with other market participants
d) Faces direct competition from foreign players
Answer: a) Operates independently of competitive forces in the market
11. Types of Abuse of Dominant Position
Q11. Which of the following is an example of abuse of dominant position?
a) Offering product bundles
b) Imposing unfair pricing conditions
c) Reducing prices to gain market share
d) Offering promotional offers
Answer: b) Imposing unfair pricing conditions
12. Predatory Pricing
Q12. Predatory pricing is considered a form of:
a) Pro-competitive behavior
b) Abuse of dominant position
c) Fair pricing policy
d) Consumer protection
Answer: b) Abuse of dominant position
13. Limiting Market Entry
Q13. Creating barriers to entry for new firms by a dominant enterprise is an example of:
a) A valid business strategy
b) Abuse of dominant position
c) Promoting competition
d) Consumer protection
Answer: b) Abuse of dominant position
14. Regulation of Combinations
Q14. The Competition Act, 2002, regulates:
a) Combinations (mergers, acquisitions) that affect market competition
b) Small business partnerships
c) Government monopoly practices
d) Foreign exchange transactions
Answer: a) Combinations (mergers, acquisitions) that affect market competition
15. Combinations Likely to Harm Competition
Q15. A combination is prohibited under Section 6 of the Competition Act, 2002, if it is likely to:
a) Improve consumer choice
b) Cause appreciable adverse effect on competition
c) Increase market efficiency
d) Lower barriers to entry
Answer: b) Cause appreciable adverse effect on competition
16. Role of CCI in Combinations
Q16. The Competition Commission of India (CCI) examines combinations to:
a) Approve the transaction unconditionally
b) Investigate mergers and acquisitions for possible market harm
c) Ensure the transaction increases market share
d) Restrict entry of foreign firms
Answer: b) Investigate mergers and acquisitions for possible market harm
17. Functions of CCI
Q17. Which of the following is NOT a function of the Competition Commission of India?
a) Investigating anti-competitive agreements
b) Issuing orders on consumer disputes
c) Regulating combinations (mergers and acquisitions)
d) Undertaking competition advocacy and awareness
Answer: b) Issuing orders on consumer disputes
18. Competition Advocacy
Q18. One of the key roles of the Competition Commission of India is to:
a) Create public awareness about competition issues
b) Set consumer prices
c) Enforce anti-competitive regulations on foreign firms
d) Directly control mergers in the public sector
Answer: a) Create public awareness about competition issues
19. Enforcement of Competition Act
Q19. The Competition Act, 2002, is enforced by:
a) The Reserve Bank of India (RBI)
b) The Competition Commission of India (CCI)
c) The Ministry of Finance
d) The Ministry of Commerce
Answer: b) The Competition Commission of India (CCI)
20. Penalty for Anti-Competitive Agreements
Q20. If an enterprise is found guilty of entering into an anti-competitive agreement under the Competition Act, 2002, it may be:
a) Allowed to continue the agreement after paying a fee
b) Fined or penalized based on the magnitude of the adverse effect
c) Required to cease operations temporarily
d) Awarded compensation for damages
Answer: b) Fined or penalized based on the magnitude of the adverse effect
21. Section 3(1) of the Competition Act
Q21. As per Section 3(1) of the Competition Act, 2002, the agreement that causes appreciable adverse effect on competition is:
a) Valid but subject to government approval
b) Void
c) Enforceable in the court
d) Permissible after a penalty
Answer: b) Void
22. Legal Consequences of Anti-Competitive Agreements
Q22. The consequence of entering into an anti-competitive agreement under the Competition Act, 2002 is that:
a) Only the restrictive clauses will be void
b) Only the businesses that signed the agreement will be penalized
c) The entire agreement becomes void
d) The agreement can be modified with approval from the CCI
Answer: c) The entire agreement becomes void
23. Difference Between MRTP Act and Competition Act
Q23. Under the MRTP Act, the entire agreement is not necessarily void; only:
a) The restrictive clauses are considered void
b) All clauses are void
c) The agreement is subject to government approval
d) The agreement is nullified after a hearing
Answer: a) The restrictive clauses are considered void
24. Which of the following agreements is NOT presumed to have an appreciable adverse effect on competition?
Q24. Which of the following is NOT presumed to have an appreciable adverse effect on competition under the Competition Act, 2002?
a) Agreement to limit production/supply
b) Agreement to fix price
c) Exclusive distribution agreements
d) Bid rigging
Answer: c) Exclusive distribution agreements
25. Market Allocation Agreements
Q25. An agreement to allocate markets between enterprises is an example of:
a) A permissible business strategy
b) An anti-competitive agreement
c) A competitive market practice
d) A government-approved regulation
Answer: b) An anti-competitive agreement
26. Bid Rigging
Q26. Bid rigging is a type of:
a) Competitive market behavior
b) Anti-competitive agreement
c) Consumer advocacy
d) Government-approved pricing strategy
Answer: b) Anti-competitive agreement
27. Application of Rule of Reason
Q27. The "Rule of Reason" is applied to agreements such as:
a) Price fixing
b) Exclusive supply agreements
c) Market allocation agreements
d) Predatory pricing
Answer: b) Exclusive supply agreements
28. Role of CCI in Anti-Competitive Practices
Q28. The Competition Commission of India (CCI) is responsible for:
a) Investigating and prohibiting anti-competitive agreements
b) Regulating business expansion and investments
c) Approving prices for essential goods
d) Setting up foreign partnerships
Answer: a) Investigating and prohibiting anti-competitive agreements
29. Regulation of Dominant Enterprises
Q29. An enterprise is said to be in a dominant position if it has the ability to:
a) Impose prices without considering competition
b) Increase its market share by monopolizing sectors
c) Operate independently of competitive forces
d) Control production costs through market agreements
Answer: c) Operate independently of competitive forces
30. Abuse of Dominance: Imposing Unfair Prices
Q30. One example of abuse of dominant position is:
a) Offering discounts to customers
b) Imposing unfair prices on consumers
c) Developing innovative products
d) Expanding market share through competitive pricing
Answer: b) Imposing unfair prices on consumers
31. Predatory Pricing
Q31. Predatory pricing refers to:
a) Offering products at a higher price to gain market share
b) Lowering prices temporarily to eliminate competitors
c) Setting stable market prices
d) Regulating prices based on demand
Answer: b) Lowering prices temporarily to eliminate competitors
32. Limiting Production or Markets
Q32. Limiting production or controlling market entry can be considered a form of:
a) Fair competition
b) Consumer protection
c) Abuse of dominant position
d) Market development
Answer: c) Abuse of dominant position
33. Discriminatory Pricing Practices
Q33. Applying dissimilar conditions to similar transactions is an example of:
a) Fair market conduct
b) Abuse of dominant position
c) Anti-competitive pricing
d) Market regulation
Answer: b) Abuse of dominant position
34. Regulation of Mergers and Acquisitions
Q34. The Competition Act, 2002 regulates mergers and acquisitions that:
a) Increase efficiency in the market
b) Are likely to cause an appreciable adverse effect on competition
c) Benefit consumers with reduced prices
d) Provide financial support to struggling enterprises
Answer: b) Are likely to cause an appreciable adverse effect on competition
35. Combinations Likely to Harm Competition
Q35. A combination is likely to harm competition when it:
a) Reduces market efficiency
b) Increases concentration in the market
c) Reduces consumer choice
d) Increases consumer benefits
Answer: b) Increases concentration in the market
36. Procedure for Combination Regulation
Q36. In the case of a combination, the Competition Commission of India will:
a) Approve the combination without review
b) Examine if it is likely to cause harm to competition
c) Allow the combination after reviewing public opinion
d) Cancel the combination regardless of market impact
Answer: b) Examine if it is likely to cause harm to competition
37. Regulation of Combinations
Q37. Combinations under the Competition Act, 2002 include:
a) Only mergers between government firms
b) Large mergers, acquisitions, or amalgamations
c) Any business partnership agreement
d) Joint ventures between firms within the same sector
Answer: b) Large mergers, acquisitions, or amalgamations
38. Functions of the Competition Commission of India
Q38. Which of the following is NOT a function of the Competition Commission of India (CCI)?
a) Prohibiting anti-competitive agreements
b) Investigating abuse of dominant position
c) Setting industry-wide price limits
d) Regulating large mergers and acquisitions
Answer: c) Setting industry-wide price limits
39. Public Awareness and Advocacy
Q39. One of the main functions of the CCI is to:
a) Advise on tax policies for businesses
b) Create public awareness and provide training on competition issues
c) Regulate foreign investments
d) Set the price of essential goods
Answer: b) Create public awareness and provide training on competition issues
40. Opinion on Competition Issues
Q40. The CCI is required to give its opinion on competition issues when:
a) A reference is received from a statutory authority or the Central Government
b) A new business is registered in India
c) A company faces financial trouble
d) A business submits a complaint about unfair practices
Answer: a) A reference is received from a statutory authority or the Central Government
41. Penalty for Abuse of Dominant Position
Q41. If a company is found guilty of abusing its dominant position under the Competition Act, 2002, it may be:
a) Required to pay fines based on its market share
b) Ordered to cease operations for a period
c) Penalized with monetary fines or orders to cease unfair practices
d) Allowed to continue its practices after a warning
Answer: c) Penalized with monetary fines or orders to cease unfair practices
42. Effect of Anti-Competitive Practices on Consumers
Q42. Anti-competitive practices negatively affect consumers by:
a) Reducing prices
b) Decreasing the number of market players
c) Encouraging innovation and competition
d) Offering more consumer choices
Answer: b) Decreasing the number of market players
43. Role of Competition Law in Economic Development
Q43. Competition Law contributes to economic development by:
a) Restricting the number of businesses in a market
b) Encouraging a free and fair market environment
c) Preventing foreign companies from entering local markets
d) Offering subsidies to firms that comply with regulations
Answer: b) Encouraging a free and fair market environment
44. Power of the CCI
Q44. The Competition Commission of India has the power to:
a) Approve business mergers automatically
b) Conduct inquiries into anti-competitive practices
c) Regulate interest rates for businesses
d) Dictate the maximum profit margins for firms
Answer: b) Conduct inquiries into anti-competitive practices
45. Monopolistic Practices
Q45. Monopolistic practices, such as controlling prices and production, are considered:
a) Legal under the Competition Act
b) A form of market regulation
c) Abuse of dominant position
d) Consumer protection strategies
Answer: c) Abuse of dominant position
46. Anti-Competitive Agreements
Q46. Which of the following would NOT typically be considered an anti-competitive agreement under the Competition Act, 2002?
a) An agreement to fix prices
b) An agreement to limit supply
c) An agreement to provide exclusive discounts
d) An agreement to allocate markets
Answer: c) An agreement to provide exclusive discounts
47. Tie-In Arrangements
Q47. A tie-in arrangement occurs when a business requires a customer to purchase one product in order to buy another. This is considered:
a) A valid promotional strategy
b) An anti-competitive practice
c) A price competition tool
d) A government-regulated practice
Answer: b) An anti-competitive practice
48. Resale Price Maintenance
Q48. Resale price maintenance, where a manufacturer fixes the price at which retailers can sell products, is considered:
a) A legal practice to ensure fair profit distribution
b) A method to create competitive advantage
c) An anti-competitive practice
d) A fair market agreement
Answer: c) An anti-competitive practice
49. Exclusive Supply Agreements
Q49. Exclusive supply agreements, where a supplier restricts a buyer from purchasing goods from other suppliers, are evaluated under the:
a) Rule of Reason
b) Per se rule
c) Vertical merger guidelines
d) Price control policies
Answer: a) Rule of Reason
50. Regulation of Combinations: Section 6
Q50. Section 6 of the Competition Act, 2002, prohibits any combination that:
a) Improves market efficiency
b) Leads to increased competition in the market
c) Causes or is likely to cause an appreciable adverse effect on competition
d) Reduces barriers to entry for new firms
Answer: c) Causes or is likely to cause an appreciable adverse effect on competition
51. Filing of Combinations
Q51. A combination under the Competition Act, 2002, refers to:
a) A merger, acquisition, or amalgamation that may impact competition
b) An agreement between two parties to form a joint venture
c) A price-fixing arrangement between competitors
d) A temporary partnership for marketing purposes
Answer: a) A merger, acquisition, or amalgamation that may impact competition
52. Market Power in Dominance
Q52. Market power refers to an enterprise's ability to:
a) Control competitors by offering better products
b) Influence market conditions and set prices independently of competition
c) Establish new competitors in the market
d) Use its resources for market growth
Answer: b) Influence market conditions and set prices independently of competition
53. Barriers to Entry
Q53. Barriers to entry are often created by:
a) New technology innovation
b) Market saturation
c) Abuse of dominant position by existing players
d) Government subsidies for new entrants
Answer: c) Abuse of dominant position by existing players
54. Predatory Pricing: Consumer Impact
Q54. Predatory pricing negatively impacts consumers by:
a) Reducing the variety of available products
b) Increasing prices once competition is eliminated
c) Encouraging competition in the market
d) Offering consumers lower prices permanently
Answer: b) Increasing prices once competition is eliminated
55. Role of CCI in Advancing Competition Awareness
Q55. The Competition Commission of India (CCI) plays a role in:
a) Creating public awareness about the importance of competition law
b) Regulating specific industries for monopolies
c) Setting prices for goods in competitive markets
d) Establishing the number of firms allowed in a market
Answer: a) Creating public awareness about the importance of competition law
56. CCI's Approach to Abuse of Dominant Position
Q56. In cases of abuse of dominant position, the CCI considers:
a) The financial losses of the dominant firm
b) Whether the market is controlled by the dominant player
c) Whether competitors benefit from the dominant firm’s behavior
d) The potential impact on market competition and consumer welfare
Answer: d) The potential impact on market competition and consumer welfare
57. Preventing Unfair Trade Practices
Q57. One of the goals of the Competition Act, 2002, is to:
a) Provide subsidies to large firms for fair practices
b) Prevent unfair trade practices that harm competition
c) Eliminate foreign competitors from the market
d) Encourage businesses to form exclusive agreements
Answer: b) Prevent unfair trade practices that harm competition
58. Market Share in Dominant Position
Q58. The ability of an enterprise to maintain a dominant position in the market is directly related to:
a) Its market share and its control over production
b) Government control over its pricing strategy
c) The number of competitors in the market
d) The variety of products it offers
Answer: a) Its market share and its control over production
59. Penalty for Anti-Competitive Practices
Q59. An enterprise found guilty of engaging in anti-competitive practices can be penalized with:
a) Financial fines or orders to cease the anti-competitive behavior
b) Temporary suspension of operations
c) Legal charges filed against competitors
d) Compensation to consumers only
Answer: a) Financial fines or orders to cease the anti-competitive behavior
60. Regulation of Large Mergers
Q60. The primary concern with regulating large mergers and acquisitions is to:
a) Ensure that the combined entity does not result in reduced competition or consumer harm
b) Maintain monopoly power for dominant firms
c) Limit foreign firms from acquiring domestic companies
d) Increase the market share of the merging firms
Answer: a) Ensure that the combined entity does not result in reduced competition or consumer harm
61. Impact of Anti-Competitive Agreements on Small Firms
Q61. Anti-competitive agreements can be particularly harmful to small firms because they:
a) Create opportunities for small firms to collaborate
b) Reduce their ability to compete on merit
c) Increase the number of competitors in the market
d) Encourage innovation in the market
Answer: b) Reduce their ability to compete on merit
62. Competition Act and Consumer Welfare
Q62. The Competition Act, 2002 aims to protect consumer welfare by:
a) Ensuring consumers have more control over prices
b) Preventing anti-competitive practices that exploit consumers
c) Reducing the availability of goods in the market
d) Encouraging monopolies for market stability
Answer: b) Preventing anti-competitive practices that exploit consumers
63. Merger Review Process
Q63. When reviewing a proposed merger, the CCI evaluates:
a) The consumer’s willingness to pay higher prices
b) The impact on competition and market dynamics
c) The merger’s impact on the dominant firm’s market share
d) Whether the merging firms are profitable
Answer: b) The impact on competition and market dynamics
64. Exclusive Distribution Agreements
Q64. Exclusive distribution agreements, as per the Competition Act, 2002, are typically:
a) Automatically considered anti-competitive
b) Judged by the Rule of Reason to determine competition effects
c) Completely banned in all cases
d) Always beneficial to competition
Answer: b) Judged by the Rule of Reason to determine competition effects
65. Function of CCI Regarding Mergers
Q65. The function of the CCI with regard to mergers is to:
a) Promote mergers between competitors
b) Examine whether the merger will reduce market competition
c) Approve all mergers automatically
d) Prevent mergers that benefit consumers
Answer: b) Examine whether the merger will reduce market competition
66. Impact of Cartels
Q66. A cartel, which involves an agreement between competitors to fix prices or allocate markets, is:
a) Legal as long as it benefits consumers
b) A prohibited anti-competitive practice under the Competition Act
c) Allowed under certain market conditions
d) Permissible with government authorization
Answer: b) A prohibited anti-competitive practice under the Competition Act
67. Predatory Pricing: CCI's Role
Q67. If a firm engages in predatory pricing, the Competition Commission of India (CCI) will:
a) Approve the pricing strategy if it benefits consumers
b) Investigate whether the pricing strategy is intended to eliminate competition
c) Promote such practices to increase market efficiency
d) Consider it as a valid business strategy if the firm is profitable
Answer: b) Investigate whether the pricing strategy is intended to eliminate competition
68. Abuse of Dominance: Examples
Q68. Which of the following actions would be considered as abuse of a dominant position?
a) Lowering prices to attract more consumers
b) Charging discriminatory prices to different customers for similar goods
c) Engaging in healthy competition with other market players
d) Innovating and improving products to attract more customers
Answer: b) Charging discriminatory prices to different customers for similar goods
69. Market Allocation Agreements
Q69. Market allocation agreements between competitors that divide markets among themselves based on geography or customers are:
a) Permitted if they lower consumer prices
b) Prohibited under the Competition Act, 2002
c) Allowed under the Rule of Reason
d) Legal only for products with low demand
Answer: b) Prohibited under the Competition Act, 2002
70. Resale Price Maintenance
Q70. Resale price maintenance is considered anti-competitive because it:
a) Increases the variety of products available to consumers
b) Restricts retailers’ freedom to set their own prices
c) Encourages healthy competition among retailers
d) Encourages new firms to enter the market
Answer: b) Restricts retailers’ freedom to set their own prices
71. Dominant Position: Factors
Q71. A firm is considered to hold a dominant position in a market when:
a) It operates in a market with few competitors
b) It can influence market prices independently of competitive forces
c) It has high product differentiation and customer loyalty
d) It has the largest market share regardless of other factors
Answer: b) It can influence market prices independently of competitive forces
72. Vertical Mergers
Q72. Vertical mergers, where firms from different stages of the production process combine, are primarily evaluated for:
a) The potential to reduce competition between the merged firms
b) The creation of new market barriers for competitors
c) Their effects on increasing consumer choice and efficiency
d) Their ability to harm consumer welfare by increasing prices
Answer: c) Their effects on increasing consumer choice and efficiency
73. Anti-Competitive Practices: Market Conditions
Q73. Anti-competitive practices such as price-fixing or bid-rigging harm market conditions by:
a) Increasing the number of market participants
b) Lowering production costs for consumers
c) Reducing competition and exploiting consumers
d) Enhancing market transparency and efficiency
Answer: c) Reducing competition and exploiting consumers
74. Rule of Reason: Application
Q74. The Rule of Reason is applied by the CCI to evaluate the impact of:
a) All anti-competitive agreements automatically
b) Only horizontal agreements
c) Exclusive agreements, tie-in arrangements, and vertical restrictions
d) Predatory pricing and market abuse
Answer: c) Exclusive agreements, tie-in arrangements, and vertical restrictions
75. Prevention of Cartels
Q75. Cartels are prohibited because they:
a) Encourage competition among firms
b) Drive prices lower, benefiting consumers
c) Limit competition and increase prices, harming consumers
d) Foster greater innovation and consumer choice
Answer: c) Limit competition and increase prices, harming consumers
76. Competition Advocacy: CCI’s Role
Q76. One of the key functions of the Competition Commission of India (CCI) is to:
a) Investigate all mergers and acquisitions regardless of their impact on competition
b) Promote competition advocacy and create awareness among consumers and businesses
c) Regulate international trade agreements and imports
d) Set price controls in monopolistic markets
Answer: b) Promote competition advocacy and create awareness among consumers and businesses
77. Market Share and Abuse of Dominance
Q77. A dominant firm’s market share is an indicator of:
a) How well it competes in the market
b) Its ability to influence prices and control competition
c) Its legal right to set prices
d) Its economic efficiency in serving consumers
Answer: b) Its ability to influence prices and control competition
78. Competition Act: Mergers and Acquisitions
Q78. The Competition Act, 2002, regulates mergers and acquisitions primarily to:
a) Encourage all types of mergers irrespective of competition concerns
b) Ensure that combinations do not significantly reduce or prevent competition in the market
c) Eliminate the need for competition between firms in a market
d) Prevent the entry of foreign companies into Indian markets
Answer: b) Ensure that combinations do not significantly reduce or prevent competition in the market
79. Impact of Anti-Competitive Agreements on Consumers
Q79. Anti-competitive agreements, such as price-fixing or market allocation, primarily harm consumers by:
a) Increasing product variety and choice
b) Reducing market transparency
c) Raising prices and limiting the availability of goods
d) Encouraging healthy market competition
Answer: c) Raising prices and limiting the availability of goods
80. Abuse of Dominant Position: CCI's Action
Q80. If a company is found abusing its dominant position, the CCI may:
a) Provide a subsidy to the dominant firm
b) Impose fines and order corrective actions to restore competition
c) Automatically grant market monopolies
d) Support the firm’s market strategies
Answer: b) Impose fines and order corrective actions to restore competition
81. Anti-Competitive Agreements: CCI's Power
Q81. The Competition Commission of India has the authority to:
a) Approve any agreement between firms if it does not result in market disruption
b) Declare anti-competitive agreements void and impose penalties
c) Allow monopolistic practices if they benefit the economy
d) Regulate prices and set market rules for large firms
Answer: b) Declare anti-competitive agreements void and impose penalties
82. Impact of Combinations on Competition
Q82. The primary concern with regulating combinations under the Competition Act, 2002, is:
a) Ensuring the merger will lead to greater market dominance
b) Whether the combination will lead to an appreciable adverse effect on competition
c) Minimizing the number of market participants
d) Promoting international mergers with foreign firms
Answer: b) Whether the combination will lead to an appreciable adverse effect on competition
83. Dominance and Consumer Welfare
Q83. The abuse of a dominant position affects consumer welfare by:
a) Reducing market competition and raising prices
b) Increasing the number of available products in the market
c) Encouraging new firms to enter the market
d) Improving overall product quality
Answer: a) Reducing market competition and raising prices
84. Competition Law and International Trade
Q84. How does the Competition Act, 2002, affect international trade in India?
a) By limiting foreign firms’ ability to enter Indian markets
b) By preventing anti-competitive behavior and ensuring a level playing field for foreign and domestic firms
c) By imposing tariffs and trade restrictions on foreign companies
d) By mandating international mergers with Indian firms
Answer: b) By preventing anti-competitive behavior and ensuring a level playing field for foreign and domestic firms
85. Functions of CCI: Competitive Market Practices
Q85. One of the key functions of the CCI is to:
a) Eliminate competition in certain sectors
b) Prevent and penalize anti-competitive practices that harm consumers and competition
c) Set prices for goods and services in regulated industries
d) Ensure that monopolies are maintained for economic stability
Answer: b) Prevent and penalize anti-competitive practices that harm consumers and competition
86. Collusive Bidding
Q86. Collusive bidding, where firms cooperate to rig bids for contracts, is considered:
a) A legal business practice to ensure efficiency
b) An anti-competitive and illegal practice under the Competition Act, 2002
c) A practice that benefits consumers through lower prices
d) A permissible practice for government contracts
Answer: b) An anti-competitive and illegal practice under the Competition Act, 2002
87. Anti-Competitive Agreements: Presumption
Q87. According to the Competition Act, 2002, which of the following is presumed to have an appreciable adverse effect on competition?
a) Exclusive supply agreements
b) Bid rigging
c) Vertical price agreements
d) Exclusive distribution agreements
Answer: b) Bid rigging
87. Competition Act: Anti-Competitive Practices
Q87. Which of the following is NOT an example of anti-competitive practices under the Competition Act, 2002?
a) Cartel formation
b) Exclusive supply agreements
c) Limiting production and supply
d) Conducting fair trade and price negotiations
Answer: d) Conducting fair trade and price negotiations
88. Competition Law: Role of Consumers
Q88. One of the main objectives of the Competition Act, 2002, is to:
a) Prevent government intervention in the market
b) Safeguard consumer interests by ensuring fair competition
c) Protect dominant firms from external competition
d) Increase monopolistic practices for market stability
Answer: b) Safeguard consumer interests by ensuring fair competition
89. Regulation of Combinations
Q89. Combinations that are likely to have an appreciable adverse effect on competition are:
a) Encouraged by the Competition Act, 2002
b) Automatically approved after a review by CCI
c) Prohibited and deemed void
d) Regulated to ensure the competition remains undisturbed
Answer: c) Prohibited and deemed void
90. Competition Commission’s Investigations
Q90. The Competition Commission of India (CCI) investigates:
a) Only monopolistic firms
b) Practices having an appreciable adverse effect on competition
c) All mergers and acquisitions without evaluating their impact on competition
d) Only international firms and cartels
Answer: b) Practices having an appreciable adverse effect on competition
91. Bid Rigging: Characteristics
Q91. Bid rigging, a form of collusive bidding, typically involves:
a) Competition between multiple bidders to drive up prices
b) Competitors coordinating their bids to fix a particular outcome
c) Transparent and fair bidding processes
d) Encouraging new participants to enter the bidding process
Answer: b) Competitors coordinating their bids to fix a particular outcome
92. Cartel Formation: Definition
Q92. A cartel is defined as:
a) A group of firms working together to drive prices lower
b) An association of competitors that agree to limit competition, raise prices, or allocate markets
c) A collective agreement to increase market share
d) A legal practice to maintain market stability
Answer: b) An association of competitors that agree to limit competition, raise prices, or allocate markets
93. Exemptions to Competition Law
Q93. Under the Competition Act, 2002, certain activities may be exempted from its provisions. These exemptions could apply to:
a) Anti-competitive agreements that reduce market efficiency
b) Practices carried out for public interest, such as promoting economic development
c) Exclusive distribution arrangements that harm competition
d) Price-fixing arrangements among companies with less than 20% market share
Answer: b) Practices carried out for public interest, such as promoting economic development
94. Competition Act: Dominant Position Abuse
Q94. Which of the following practices would NOT be considered abuse of a dominant position?
a) Charging excessively high prices in the market
b) Engaging in predatory pricing to drive competitors out of the market
c) Offering discounts to consumers to encourage product loyalty
d) Discriminating against certain suppliers in terms of terms and conditions
Answer: c) Offering discounts to consumers to encourage product loyalty
95. CCI and Public Awareness
Q95. The CCI’s role in competition advocacy includes:
a) Issuing penalties and fines for competition-related offenses
b) Regulating foreign direct investment (FDI) in India
c) Promoting public awareness and educating businesses and consumers on competition issues
d) Directly managing business mergers and acquisitions
Answer: c) Promoting public awareness and educating businesses and consumers on competition issues
96. Tie-in Arrangements
Q96. Tie-in arrangements, where a seller requires a buyer to purchase a secondary product along with the main product, are:
a) Legal if the products are complementary
b) Automatically allowed if the buyer agrees
c) Considered anti-competitive when they harm market competition
d) Permitted under the Rule of Reason if they benefit consumers
Answer: c) Considered anti-competitive when they harm market competition
97. Price Fixing
Q97. Price fixing between competitors, where they agree to set prices at a certain level, is:
a) Allowed if the products are luxury items
b) A common and lawful practice in competitive markets
c) Prohibited under the Competition Act, 2002 as it restricts competition
d) Permitted if the market is facing deflation
Answer: c) Prohibited under the Competition Act, 2002 as it restricts competition
98. Mergers and Acquisitions: CCI’s Role
Q98. The Competition Commission of India (CCI) primarily evaluates mergers and acquisitions to ensure:
a) They lead to larger market shares for the involved companies
b) They don’t result in anti-competitive effects on the market
c) They increase government control in the industry
d) They help maintain monopolies for greater market control
Answer: b) They don’t result in anti-competitive effects on the market
99. Competition Law: Consumer Interests
Q99. The primary aim of competition law is to protect:
a) Large corporations from market competition
b) Consumer welfare by promoting fair market practices
c) Monopolistic structures from external competition
d) Government-controlled pricing in all industries
Answer: b) Consumer welfare by promoting fair market practices
100. Dominant Position: Market Impact
Q100. A firm holding a dominant position in a market should avoid:
a) Expanding its market share through natural competition
b) Acting independently of competitive forces, potentially exploiting consumers
c) Innovating to improve product offerings
d) Increasing consumer choice and market variety
Answer: b) Acting independently of competitive forces, potentially exploiting consumers
101. Enquiry into Anti-Competitive Agreements
Q101. The Competition Commission of India can initiate an enquiry into anti-competitive agreements when:
a) The market share of the firms involved is greater than 25%
b) Any anti-competitive agreement is likely to have an appreciable adverse effect on competition
c) The firms involved show a profit margin greater than 50%
d) The agreement only involves firms from the public sector
Answer: b) Any anti-competitive agreement is likely to have an appreciable adverse effect on competition
102. Exclusionary Tactics and Market Entry
Q102. Exclusionary tactics, such as predatory pricing or refusing to deal, are harmful because they:
a) Increase barriers to entry for new firms and reduce competition
b) Encourage new firms to enter the market
c) Help maintain consumer prices at reasonable levels
d) Increase innovation by existing firms
Answer: a) Increase barriers to entry for new firms and reduce competition
103. Dominance in a Relevant Market
Q103. A company is considered to hold a dominant position in a relevant market when it:
a) Has significant market share and can influence pricing or terms in its favor
b) Competes on equal terms with all other firms in the market
c) Sells a unique product with no direct competitors
d) Focuses on low prices without market influence
Answer: a) Has significant market share and can influence pricing or terms in its favor
104. Market Share and Abuse of Dominance
Q104. The CCI primarily considers market share in determining whether a firm is abusing its dominant position because:
a) A high market share allows a firm to operate freely without competition
b) Market share is irrelevant in competition law investigations
c) A firm with significant market share may influence market conditions, raising concerns for competition
d) Smaller firms are often the victims of market share dominance
Answer: c) A firm with significant market share may influence market conditions, raising concerns for competition
105. Anti-Competitive Agreements: Legal Enforcement
Q105. If a company is found guilty of entering into an anti-competitive agreement, the Competition Commission of India can:
a) Impose fines, order corrective measures, and void the agreement
b) Provide a rebate on fines for voluntary disclosures
c) Allow the agreement to continue under supervision
d) Approve the agreement if it benefits the national economy
Answer: a) Impose fines, order corrective measures, and void the agreement
